Fall of the barter model

 

Originally, the first Argentinean barter clubs (1995) were created in a local development logic. It is a political project to fight against poverty and an increasing social exclusion. But behind this beautiful project with a solidarity-based appearance, lies a profit-seeking enterprise. The exponential development of barter clubs, without any safe-guard, without any control, allows many excesses and problems, notably over-issuing currency leading to wild inflation. Power struggle, fraudulent practice, (clientelism, forgery, sale of stolen or poor-quality goods…) are common practice. From excesses to mafia-like practices, it’s a small step!

Inspite of all the positive aspects presented in the former articles, unfortunately, this experienced was a failure.

 

From the network to the model of franchise


In 1995 , Ruben Ravera, Carlos de Sanzo and Horacio Covas open the first barter club in Bernal, south of the district of Buenos Aires. The experience is soon copied in the capital city and in the North of the district, supervised by the founding group, called ‘the three from Bernal’. As soon as exchanges start between the members of various clubs, they create the global Barter Network (RGT). Gradually, they spread their idea through the whole country. New clubs adopt the regulations of the RGT and issue the network creditos, called “arbolito”.

The number of nodos explodes and to keep control the leaders try to regulate the network. They create an inter-zone organization, a centralized information system, the obligation to have and communicate statement of accounts in each zone. Gradually they will close collective decision-taking commissions to set up a hierarchical organization in which they get everything under control, and in which they give the rules. The 3 from Bernal become the administrators of a complementary currency that they have the monopoly of issueing. Some will tell us that ‘they acted like the Central Bank’. Bernal opens new nodos all over the country and delegates local management to the club coordinators. This pattern of development soon looks like a franchise. As early as 1999, they will openly talk of a ‘social franchise’, not so social in facts, some will even call it ‘a rectal franchise’.

 

How did the pattern of Bernal franchise find expression?

 

Carlos Perez Lora ( Red Mar y Sierras) points out that one of the founders, Horacio Covas, comes from a multi-level marketing company whose pyramidal organization inspired the RGT. He explains that Bernal would send a box of 10 000 creditos to a coordinator willing to start a nodo.  The coordinator would sell 50 creditos for 2 pesos to every newcomer. It was good bargain, since in barter clubs, the prices of the products were conformed to the prices of the conventional market. So 1 credito = 1peso = 1 dollar (exchange rate parity dollar/peso in Argentina)

Briefly, for 2 pesos, you made 50 dollars! Bernal sold money for money. Then the coordinator would send back 400 pesos (10 000/50×2) to Bernal, that is 400 dollars! Bernal opened thousands of nodos all over the country, multiplying the sales of creditos…

Diego Garris (Red de Cordoba) also gives evidence of these sales’ practices. During the last 6 months, Bernal opened thousands of short-lived nodos. They would send sales rep all over the country to sell boxes of notes. To join a nodo, you just had to buy creditos without being obliged to bring quality stuff to barter. Consequently, the nodos were empty and closed down rapidly. Diego suspects that some have become millionaires due to these practices that were not social.

In other words, Bernal granted themselves the right to issue currency and printed money, making profit, regardless of the consequences.

 

A kingly right for three people

 

The Bernal complementary currency, the arbolito, is much more than a simple local currency. It can be changed on the whole territory and could be called national currency! Facing the extent of the phenomenon, one can legitimately wonder how the State could let themselves be deprived of their kingly right to issue currency. Is it democratic? (The founders were not elected, contrary to the members of the government). Some will say that the government was quite pleased to find an answer to the crisis and to unemployment. Others will say that accepting barter clubs was a way of controlling social unrest. The Argentineans were busy bartering, they had no time to demonstrate.

Bartering made the founders popular, everyone knew them. Diego Garris is sure that if they had been able to hold out 6 months more, they could have become Presidents of the country. If the founders have a lot of power, so do coordinators and some of them took advantage of it. During our interviews, some compared the coordinators to a sort of ‘ fraudulent barter customs”, charging different taxes (carparks, entrance…) in creditos or even in pesos, helping themselves first, accepting purchasing and selling stolen goods, practices between clientelism and corruption. Being the masters in the nodos, some coordinators served their own interests and were free to impose the rules they wanted.

 

Differences, reactions, splits… but too late

 

If in this article we give an account of the shadiest aspects of Argentinean bartering, we must not forget that this experience mobilized and federated people with sincere solidarity-based objectives. Many committed themselves to develop an alternative barter system in which everyone, even with no funds, could create their own riches. It is no sooner than 2001 that the network splits up into two opposed patterns: The Global Barter Network and the Solidarity-based Barter Network, RGT vs RTS. Other networks inside the country will also leave the RGT but it is too late to avoid the inescapable fall of barter clubs.

Bernal floods the country with creditos, this super-issuing (ad libitum) causes an unprecedented inflation and a fall in production. Everybody has got lots of creditos, everybody wants to purchase (food mainly) but no-one produces , the clubs get empty, there is nearly nothing to sell…

 

RGT tsunami


The RGT is by far the most important network in the country and it leads to the collapse of all the other networks. Due to inflation, the prices of exchanges are beyond measure, 15 000 creditos for a bottle of wine, 14 000 creditos for 6 small cakes. The creditos have no value anymore and for the second consecutive time, following the traditional economical crisis, within a few months, some lose everything.

 

Can a complementary currency be national ?

 

Alternative currency is efficient when it is local. It cannot be a substitute to the state currency. In the Middle Ages, the lords were deprived of the power of issueing currency then the private banks were (some banks got nationalized like the Banque de France in 1945)

National currencies are handled by the States, not without reason, even if the rules of governance are not perfect, even if – in  reality – the States have given this power back to private banks (by delegating issuing currency via credit emission)

Alternate barter systems have a place in social and solidarity-based economy. They exist not to copy the failings of conventional economy. This Argentinean experience makes us consider that man with his faults, the temptation of power and personal benefit, is certainly one of the biggest obstacles to overcome. We are not born supportive of each other, it must be learnt every day, a struggle against our nature, made up by centuries of individualism, conquests and wars against others. Above all, it is a change of paradigm (a society of plenty and cooperation) and a change of attitude (responsible, supportive) that will have to be inspired.